The Reserve Bank of India (RBI) released the Annual Report of the Ombudsman Schemes for the year 2020-21 , which has been prepared for the nine-month period, i.e., July 1, 2020 to March 31, 2021, in alignment with the change in the Financial Year of RBI from ‘July – June’ to ‘April – March’ with effect from July 1, 2020. The Annual Report covers the activities under the Banking Ombudsman Scheme, 2006 (BOS), the Ombudsman Scheme for Non-Banking Financial Companies, 2018 (OSNBFC) and the Ombudsman Scheme for Digital Transactions, 2019 (OSDT), major developments and the way forward in the area of consumer protection.
Some highlights from the Annual Report are as follows:
A. Activities under BOS, OSNBFC and OSDT
The volume of complaints received under all the three Ombudsman Schemes increased by 22.27 percent on an annualized basis and stood at 3,03,107 during the reported period.
The BOS accounted for 90.13 percent of total complaints (i.e. 2,73,204) received under the three Ombudsman Schemes. The number of complaints received under OSNBFC and OSDT stood at 8.89 percent and 0.98 percent respectively, of the total number of complaints.
The major areas of complaints under the BOS pertained to (a) ATM/debit cards; (b) mobile/electronic banking; and (c) credit cards, which collectively accounted for 42.74 percent of the total number of complaints as compared to 44.65 percent in the previous year. Under the OSNBFC, major areas of complaints were (a) non-adherence to Fair Practices Code; (b) non-observance to RBI directions; and (c) levy of charges without prior notice, accounting for 75.32 percent of the complaints as compared to 63.23 percent in the previous year.
The overall disposal rate improved to 96.59 percent from 92.52 percent in the previous year, despite higher volume of complaints, which can be attributed to the end-to-end digitization of complaint processing in CMS.
Of the maintainable complaints, 72.67 percent were resolved by mutual agreement i.e. through intervention of the Ombudsman offices / conciliation / mediation efforts.
B. Important developments during the year 2020-21
During the year, Consumer Education and Protection Department (CEPD) undertook the following initiatives for strengthening the grievance redress system:
A comprehensive framework on strengthening of grievance redress mechanism in banks, comprising of enhanced disclosures on customer complaints, recovery of cost of redress by Ombudsmen from the banks for the complaints received in excess of the respective peer group averages and annual review of grievance redress mechanisms of the banks was instituted.
Substantial groundwork for integrating the three Ombudsman Schemes into the “Reserve Bank Integrated Ombudsman Scheme (RB-IOS), 2021”, setting up of the Centralised Receipt and Processing Center along with a Contact Center, revamping CMS in wake of launch of RB-IOS, 2021 and initiatives for improving effectiveness in resolution of consumer complaints was undertaken. The RB-IOS has since been launched by Hon’ble Prime Minister on November 12, 2021.
Education and awareness campaigns were undertaken through print and electronic media.
C. Way forward
During the year April 1, 2021 to March 31, 2022 the following activities are planned:
Intensify initiatives towards consumer awareness and financial education.
Improve quality and speed of complaint disposal by enhancing CMS capabilities.
Undertake Annual Assessment of banks under the framework for strengthening grievance redress mechanism in banks and review the framework.
Further consolidation of regulatory guidelines on Consumer Protection and Customer Service.
(Yogesh Dayal)
Chief General Manager
EXECUTIVE SUMMARY
The Annual Report for the transition year 2020-21 has been prepared for the nine-month period, i.e., July 1, 2020 to March 31, 2021, in alignment with the change in the Financial Year of the Reserve Bank from ‘July – June’ to ‘April – March’ with effect from July 1, 2020. Due to this transition, the number of complaints received during July 1, 2020 to March 31, 2021 under the Ombudsman Schemes of RBI stood at 3,03,107 complaints and fell short of the total number of complaints received during July 1, 2019 to June 30, 2020 (3,30,543) by 27,436 complaints (8.30%). On an annualized basis, the volume of complaints received under the Ombudsman Schemes has gone up by 22.27%. The overall disposal rate under the three Schemes has also improved to 96.59% as compared to 92.52% in the previous reporting period.
Banking Ombudsman Scheme (BOS)
2. The BOS was notified by RBI in 1995 under Section 35A of the Banking Regulation Act, 1949. As on date, Scheduled Commercial Banks (SCBs), Scheduled Primary Urban Co-operative Banks (UCBs), Regional Rural Banks (RRBs), Small Finance Banks (SFBs) and Payment Banks (PBs) are covered under the Scheme. It is administered by RBI through 22 Offices of Banking Ombudsman (OBOs) covering all states and union territories.
3. A brief analysis of the complaints handled under BOS during July 1, 2020 to March 31, 2021 is as follows:
i. During the transition year July 1, 2020 to March 31, 2021, the OBOs received 2,73,204 complaints, as compared to 3,08,630 complaints during the previous year (July 1, 2019 to June 30, 2020). Of these, 89.28% were received electronically i.e., through the online portal Complaint Management System (CMS) and through email, as against 85.64% in the previous year.
ii. The disposal rate improved significantly from 92.36% during July 1, 2019 to June 30, 2020 to 96.67% during July 1, 2020 to March 31, 2021, a five-year high, despite the volume of complaints handled being higher than the previous year on an annualized basis, and the human resources remaining the same, which can be attributed to end-to-end digitization of complaint processing in CMS.
iii. Complaints related to (a) ATM/debit cards and (b) mobile/electronic banking (c) credit cards (d) failure to meet commitments and (e) non-observance of Fair Practices Code (FPC) were the top five grounds of complaints received at the OBOs. The share of ATM/debit card complaints, mobile/electronic banking and credit card complaints to total complaints received during July 1, 2020 to March 31, 2021 stood at 17.40%, 12.98% and 12.36% respectively. The corresponding percentage of complaints against these grounds during July 1, 2019 to June 30, 2020 were 21.97%, 13.38% and 9.30%, respectively.
iv. Complaints relating to credit cards, failure to meet commitments, and Direct Selling Agents (DSAs) and recovery agents increased during July 1, 2020 to March 31, 2021 vis-à-vis July 1, 2019 to June 30, 2020, with complaints related to DSAs and recovery agents registering a surge of over 60.66%.
v. Of the total maintainable complaints, the share of complaints resolved by mutual agreement i.e. through intervention of OBOs, conciliation/mediation, increased marginally from 72.34% during July 1, 2019 to June 30, 2020 to 72.73% during July 1, 2020 to March 31, 2021.
vi. The number of Appeals received against the decisions and Awards of the Banking Ombudsmen (BOs) decreased from 63 during July 1, 2019 to June 30, 2020 to 23 during July 1, 2020 to March 31, 2021. Of these, 10 Appeals were against Awards passed by the BOs and the remaining 13 were made by customers against rejection of their complaints by the BOs.
vii. The average cost of handling a complaint under the BOS decreased by 33.46%, from ₹2,412/- during July 1, 2019 to June 30, 2020 to ₹1,605/- during July 1, 2020 to March 31, 2021. The reduction in cost was on account of the increased volume of complaints handled by the same human resources, supported by the end-to-end digitization of complaint processing in CMS.
Ombudsman Scheme for Non-Banking Financial Companies (OSNBFC)
4. The OSNBFC was notified by RBI under Section 45L of the RBI Act, 1934 on February 23, 2018. The Scheme is applicable to (a) Non-Banking Financial Companies (NBFCs) which are authorised to accept deposits (NBFCs-D); and (b) Non-deposit taking NBFCs (NBFCs-ND) having customer interface, with an asset size of ₹100 crore and above, as on the date of the audited balance sheet of the previous financial year. The Scheme is administered through the Offices of the NBFC Ombudsman (ONBFCOs) in four metro centers viz. Chennai, Kolkata, Mumbai, and New Delhi for handling complaints received in the respective zones.
5. A brief analysis of the complaints handled by ONBFCOs during July 1, 2020 to March 31, 2021 is as follows:
i. The receipt of complaints at ONBFCOs stood at 26,957 during July 1, 2020 to March 31, 2021 increasing from 19,432 complaints received during July 1, 2019 to June 30, 2020. Thus, an increase of 38.72% was witnessed, despite the current period being short by a quarter. Of the complaints received during July 1, 2020 to March 31, 2021, 93.66% were received electronically, i.e. through CMS or email.
ii. Complaints related to non-adherence to FPC constituted 54.75% of the complaints received, followed by those related to non-observance of RBI directions (11.13%), and levy of charges without notice (9.44%).
iii. The disposal rate stood at 95.51% during July 1, 2020 to March 31, 2021 as compared to 95.34% July 1, 2019 to June 30, 2020.
iv. Of the total maintainable complaints, 73.69% were resolved through mutual settlement/ agreement i.e. through intervention of the ONBFCOs, conciliation/ mediation.
v. One Appeal was received against the decision of the NBFC Ombudsman (NBFCO) during July 1, 2020 to March 31, 2021.
Ombudsman Scheme for Digital Transactions (OSDT)
6. The OSDT was notified by RBI under Section 18 of the Payment and Settlement Systems Act, 2007 on January 31, 2019. The Scheme is applicable to Non-bank System Participants1 (issuers of Pre-paid Payment Instruments (PPIs)) regulated by the RBI. The Offices of Ombudsman for Digital Transactions (OODTs) function from all the existing 22 OBOs, and handle complaints of customers in their respective territorial jurisdictions.
7. A brief analysis of complaints handled by OODTs during July 1, 2020 to March 31, 2021 is as follows:
i. The number of complaints received at OODTs rose from 2,481 during July 1, 2019 to June 30, 2020 to 2,946 during July 1, 2020 to March 31, 2021 of which 99.90% were received through electronic means.
ii. Fund transfers/Unified Payments Interface (UPI)/BBPS/Bharat QR Code, mobile/electronic fund transfer and non-reversal of debit due to wrong beneficiary transfer by System Participant were the top three grounds of complaint under OSDT, 2019 with share in total complaints at 51.15%, 22.57%, and 8.18%, respectively.
iii. The disposal rate of complaints stood at 99.13% during July 1, 2020 to March 31, 2021. Of the maintainable complaints, 57.54% were disposed through mutual settlement/ agreement through intervention of the OODTs.
iv. No Appeal was received against the decisions and Awards of the Ombudsmen for Digital Transactions (ODTs) during July 1, 2020 to March 31, 2021.
Developments during the year
8. During the year, Consumer Education and Protection Department (CEPD) undertook the following initiatives for strengthening grievance redress systems:
i. A comprehensive framework for strengthening of grievance redress mechanism in banks was instituted in January 2021 comprising of:
a. Enhanced disclosures on complaints;
b. Recovery of cost of redress of complaints from banks;
c. Intensive review of grievance redress mechanism of banks.
ii. Root Cause Analysis (RCA) of the complaints received in RBI during July 1, 2020 to March 31, 2021 was undertaken to identify the major concerns and systemic issues, their root causes, and to formulate remedial measures to address the concerns.
iii. A review of the Ombudsman Schemes for updation and effective implementation, including through convergence was conducted by an In-house Committee. The recommendations covering, inter alia, convergence of the three Schemes into the Reserve Bank Integrated Ombudsman Scheme (RB-IOS), 2021, bringing all Regulated Entities (REs) with retail customer interface under the ambit of the converged Scheme, setting up of the Centralised Receipt and Processing Center (CRPC) for the receipt and initial processing of complaints, setting up of a Contact Center, revamping CMS, measures for reduction in Turn Around Time (TAT) for disposal of complaints, and improving effectiveness in resolution of consumer complaints were taken up for implementation.
iv. Education and awareness campaigns were undertaken through print and electronic media for the benefit of customers of REs/ members of public.
v. The RBI Ombudsmen conducted 15 Townhall events and 139 awareness programmes during the year. These events were focused on avenues of grievance redress and consumer protection issues.
Way forward
9. During the period under review, groundwork for the launch of RB-IOS, 2021, along with accompanying changes in the CMS have been carried out. RB-IOS, 2021 will replace the three existing Ombudsman Schemes: the BOS, the OSNBFC and, the OSDT.
10. During the year April 1, 2021 to March 31, 2022, efforts towards implementation of framework for financial education shall be made. Along with the launch of the RB-IOS, 2021 and the setting-up of CRPC, the capabilities of CMS shall be enhanced for more efficient redress and Interactive Voice Response System (IVRS) content has been enriched. A Contact Center will be set up at CRPC for better user engagement. The education and awareness efforts with a focus on consumer protection issues will be intensified. During the coming year, assessment shall be carried out as required under the circular on strengthening of grievance redress mechanism in banks dated January 27, 2021. Efforts shall be made towards consolidation of regulatory guidelines on Consumer Protection and Customer Service.
